Monday, December 08, 2008

Dear Kate: Why blogging economists?

Dear Kate,

It just occurred to me this morning that cafesalemba is quite a productive blog, which indicates that you guys must be spending a substantial amount of time hanging around in the cafe. But then I thought about two of your most beloved econ 101 ideas: incentive and opportunity cost, and couldn't figure out how to rationally reconcile these lessons with your behaviors of -- apart from sipping coffee, of course -- writing frequent posts and promptly responding to comments. You see, economists like to say that voting, for example, is irrational because the incentive is far smaller compared to the cost of registering and casting the ballot, and that one can make better use of their time instead. Now I take this voting example to heart, and wonder how it applies to your daily cafe behaviors. Given that the benefit of post writing and comment responding in this blog is less clear than the many alternative usage of your time (benefiting readers and commenters can never be guaranteed, and gauging the impact of your blog is close to impossible), I think I have to ask this question: Why blogging?

In anticipation of some economic enlightenment,
Dumbfounded Psychologist @ Australia

PS: Please don't say that blogging is a form of expression, it's my kind of explanation.

Dear Dumbfounded Psychologist @ Australia,

I can't speak for the baristas, but I'll do for myself. Here goes. I blog when doing it gives me more pleasure than discomfort. Right now I have exams coming up and couple of papers due next week. To your view, I probably have to be preparing myself for the exams or finishing the papers now. But I don't feel like doing either of them. Instead, I am answering your question. Because for some reason, I feel happier doing that. This is another way of saying that the benefit is higher than the cost, to me. Now. The benefit can take many forms: maybe because I like you, maybe because I want to show up (and it gives me pleasure), or simply because I'm in the mood for blogging. Whatever it is, it makes me, again happier than the alternatives. The cost of it is, yes, the time I am spending not for studying (or writing paper, whichever likelier to give me better grade). But the fact that I'm posting a blog entry now tells you that I value the benefit more than the cost. When will I stop? When the additional cost match the additional benefit. That is, when the guilt from not studying (again, or writing, whichever serves as the second best to blogging now) has reached the additional satisfaction of blogging. That is, if I add one more sentence, I don't feel happy anymore. And that's about [looking at the clock]... now.

So see you next time,



  1. dear kate,

    thanks for explaining. i'm glad that my previous question made you happy. (i always like it when you economists talk more like us psychologists, using 'happiness' rather than 'utility'; i somehow feel it brings us closer together).

    but i, as always, have a quibble. apart from the sensible logic of your explanation, i'm again dumbfounded: why doesn't the same argument work for voting? why don't economists say that voting is rational because voters are happier when they vote?

    and yes, feel free to ignore me, kate, if you find yourself happier doing something else.

    looking forward to more enlightment,
    dumbfounded psychologist @ australia

  2. DfP@A, you almost made Kate change her mind. She's been studying after posting her response to you. As your comment popped up on her mobile, she was gonna abandon her books (you should be proud, not many questions attract her attention), when she realized the cost of posting another response had risen with the clock's ticking.

    So let me make the response (needless to say, I don't have anything else more happying to do now at the very moment), although it is not necessarily approved by her.

    I think you have mistaken that all economists think voting is irrational. There is a good number of papers addressing the economics of voting (be it rational or irrational).

    Furthermore, rationality is not independent of time (and, more generally, context). It might be irrational for me to vote now. But it can be rational in the next term. Also, at one same time, it is rational for one person to vote but irrational for another.

    Wait... why do I think I have written this somewhere else? Oh ... here you go. Let me read it again to see if it's still relevant... OK, I think it's fine. Only now I would not put too much emphasis on that warm glow part (but let's save this for another discussion next time - suddenly I feel like making an indomie...)

  3. dumbfounded psychologist and aco, this is amazing!

    suddenly, i feel we are closer together. First is because, as the dumbfounded psychologist said, the term happiness comes up Kate's explanation. For example, DfP and I both have been intrigued to the possibility that emotion (e.g. happiness) is contagious through social structures.

    Second is Aco's statement: "rationality is not independent of time (and, more generally, context)"

    This means that there is no universal utility function!

    One can't just make up a utility function without paying attention to the underlying context (e.g., social structure, culture, and time).

    People here might not be aware that there is a strong rational choice tradition in sociology. One of the figure is the late James Coleman who was in Chicago (so we could imagine Coleman and Becker would hang out together).

    So Aco's view of rationality is, I think, more Colemanian than Beckerian. Coleman's book "Foundations of Social Theory" is full of cost-benefit calculations but with the assumption that rationality is local, not global.

    In other words, contexts are not mere externalities; utility functions depend on contexts.
    To create effective incentive structures we need to understand how these individuals are embedded in social relations and/or social norms. Without this knowledge, because 'rationality is not independent of time', the utility function that we create - on which the rational calculation is based - would just an abstraction without reference, i.e. a fiction.

    ps: time is indeed very important, but i think time is very complicated. another economist, Alan Kirman, has been working on the consequences of utility functions that vary with time.

    pps: i'm waiting for the response from the barrista who's now studying at the GMU econ dept. (which according to some of my brethrens is the monster of monsters).

    belligerent sociologist @ new york.

  4. Roby, hey, I am here sipping my coffee, sitting with Kate preparing exams, while Aco is busy with his Indomie (I am not sure what makes me happy most (or give me highest marginal utility): Kate's exams, Aco's Indomie, or my coffee).

    You mean the old debate on Becker's Taste? Let me offer different perspective: Utility function is there and fixed, and anything about context refers to differences in one's consumption capital. By that, any difference among optimum point, or efficient outcome, is due to different endowment of such capital.

  5. Dear BS@NY:
    The idea that 'rationality is not independent of context' is not new among economists. Arrow and Debreu's (1959) rational individuals with a 'fixed' utility function value goods in a "state-contingent" manner (e.g., an umbrella is more valuable when rainy than sunny).

  6. BS@NY, I don't know if Kate and I sounded like a sociologist. But Kate was just playing with words. She hates the sound of "utility", so she replaces it with the 'more humane' word "happiness". So to Kate, "happier" equals "more utility". I don't have much problem to that.

    And I should be very honest, too. I've never read Coleman. What I had in mind was Arrow-Debreu, just like Arya said. What we just called "context-dependent" is what A-D calls "state-contingent", or Mas-Colell terms "state-dependent". Thanks, Arya for pointing that out.

  7. dear kate and aco,

    how are you? (this is why i like talking to economists: i can ask you how you feel; when psychologists see each other, they don't say "how are you?", they say, "i know you're fine, how am i?").

    so this is what i learned from your response: some economists -- like you -- think that voting is rational for some people sometimes (i'm going to put aside your uninteresting colleagues who argue that voting is irrational for all people all the time). voting, and blogging (and everything else, for that matter), are rational because people are happiest when doing them.

    this is good stuff. we psychologists like to think that people want to be happy too, such that they always do whatever they think are going to make them happy, happier, and happiest. so yes, we psychologists think that people are going for maximum utility!

    but we also know, based on tons of research, that people are very not good at predicting their future feeling. that is, people don't always know what will make them happy. (you guys and other barristas might want to check out a cool book called stumbling on happiness by my colleague daniel gilbert; he also has a 20-minute talk at TED which i religiously recommend).

    so it would be interesting to see how this psychological theory of inaccurate prospection can be reconciled with your economic theory of rationality and happiness. but i agree, let's save this for another talk session. for the time being, i'm going to enjoy being rational :D

    rationally yours,
    dumbfounded psychologist @ australia